Peso weakens on corporate demand

The peso closed weaker Monday as firms bought dollars ahead of the US Federal Reserves meeting this week.

A dollar fetched P42.875 when trading ended, 6.5 centavos more than the P42.81 it got last Friday.

“It's very quiet today. There's very little interest in trading,” a local trader said, explaining that most investors opted to stay on the sidelines while waiting for the results of the Fed's policy meeting on Tuesday and Wednesday (Wednesday and Thursday in Manila).

This, he noted, was evidenced by the thin trading volume on Monday recorded at $611.8 million, sharply down from the $1.065 billion that changed hands last Friday.

Various emerging market currencies including the peso have suffered heavy losses against the dollar after investors turned to US assets on speculations that the Fed will taper off its $85-billion bond buying stimulus, or quantitative easing.

The trader said that movements in the local foreign exchange market were dictated by corporate demand.

“The peso was only moving with corporate flows, and dollar buying has exceeded selling,” he said.

The trader sees the peso moving at a tight 42.70 to 43.00 per dollar band on Tuesday. — BM, GMA News